Edward G. Staats v. County of Sawyer and County of Bayfield
Docket: 99-1303
Court: Court of Appeals for the Seventh Circuit; July 17, 2000; Federal Appellate Court
Edward G. Staats, the plaintiff-appellant, filed a case against Sawyer and Bayfield Counties, the defendants-appellees, after he was informed that his job as personnel director was eliminated following his hospitalization for bi-polar disorder. Staats had been diagnosed in September 1994 and, after receiving treatment, sought to return to work. Upon his return, he was required to provide a medical release, which included restrictions on his work hours and required ongoing therapy and medication monitoring. Despite complying with these conditions, Staats was ultimately told his position would be eliminated by the end of 1994.
Staats pursued state administrative remedies, filing a claim with the Wisconsin Equal Rights Division under the Wisconsin Fair Employment Act (WFEA), which found probable cause for discrimination and led to a hearing where the Administrative Law Judge (ALJ) ruled that the Counties violated the WFEA by not exploring reasonable accommodations for Staats. Meanwhile, he also filed charges with the federal Equal Employment Opportunity Commission (EEOC), which culminated in a right-to-sue letter.
The U.S. District Court dismissed Staats's claims under Titles I and II of the Americans with Disabilities Act (ADA) and the Rehabilitation Act of 1973 due to claim preclusion. However, the Seventh Circuit Court reversed this decision, allowing for further proceedings, noting that Wisconsin law permits claim splitting under these circumstances.
The Counties appealed an administrative law judge's (ALJ) decision to the Labor and Industry Review Commission (LIRC), which reversed the ALJ's ruling, concluding that the Counties did not violate the Wisconsin Fair Employment Act (WFEA) despite eliminating Staats’s position due to his disability. Staats sought judicial review of the LIRC's decision in state court, which upheld the LIRC ruling without any further appeal from Staats.
Two weeks after filing a complaint with the Equal Rights Division, Staats cross-filed with the Equal Employment Opportunity Commission (EEOC), receiving a right-to-sue letter in May 1998, leading to his federal court action. His claims alleged discrimination under the Americans with Disabilities Act and the Rehabilitation Act due to the Counties' failure to provide reasonable accommodations and the termination of his position.
The Counties moved for summary judgment, asserting that the state court's decision barred Staats's federal claims based on claim preclusion. The district court agreed and ruled in favor of the Counties, prompting Staats to appeal.
In reviewing the summary judgment, the court maintained that it must draw inferences in favor of Staats as the nonmoving party. Staats presented three arguments against the preclusive effect of the state court judgment: 1) Wisconsin law does not grant preclusive effect to the state court judgment; 2) the state court lacked jurisdiction to address his federal claims; and 3) the remedies available under Wisconsin discrimination law are narrower than those under federal law.
The court emphasized the requirement to give the Wisconsin court’s judgment full faith and credit, affirming that state administrative findings, once judicially reviewed, receive claim and issue preclusive effects in federal courts. The logic established in prior cases confirms that a reviewed state administrative decision, such as Staats's, warrants claim preclusion under federal anti-discrimination statutes, including the ADA and Rehabilitation Act.
The Wisconsin Supreme Court's decision in Sopha v. Owens-Corning Fiberglas Corp. establishes that three criteria must be met to bar a subsequent action: (1) identity of parties in both suits; (2) a final judgment on the merits from a court with jurisdiction; and (3) identity of causes of action. In this case, the first criterion is satisfied as Staats and the Counties are the opposing parties in both actions. The third criterion is also likely met, as Staats's claims under the WFEA, ADA, and Rehabilitation Act stem from the same factual scenario regarding the termination of his employment, adhering to Wisconsin's transactional approach.
The central issue arises with the second criterion—whether the prior judgment possesses the requisite finality and jurisdiction for preclusive effect. The state court's review of the LIRC decision resulted in a final judgment, which holds despite the truncated procedures involved. This judgment followed adversarial administrative proceedings that provided adequate due process safeguards.
Further analysis reveals that the jurisdiction of both the state agency and state court must be considered, as Wisconsin law dictates that earlier judgments are conclusive regarding all matters litigated or which could have been litigated. If a plaintiff raises a claim involving both state and federal law and only pursues one theory in court, they cannot later bring a second action based on the omitted theory unless the first court lacked jurisdiction to hear it or would have declined to exercise it.
If a plaintiff could have brought all claims from a single transaction in a forum of general jurisdiction but instead opts for a limited jurisdiction forum, the doctrine of claim preclusion bars any claims not brought in the chosen forum. If no suitable forum exists for all claims, the plaintiff is allowed to litigate in multiple forums without preclusion. The case of Waid v. Merrill Area Public Schools illustrates that pursuing a claim in an administrative forum does not prevent subsequent claims in federal or state courts if those claims could not have been asserted in the original forum.
In the current case, the Equal Rights Division has limited jurisdiction, allowing only claims under the Wisconsin Fair Employment Act (WFEA) and excluding federal anti-discrimination claims. Therefore, Staats could not bring his federal claims alongside his WFEA claims in the Equal Rights Division. Since the WFEA does not permit a private right of action, Staats could not pursue these claims in any state or federal court. Consequently, he had to split his claims among different forums, as he could not consolidate his WFEA, Americans with Disabilities Act (ADA), and Rehabilitation Act claims in one venue. Previous rulings support that a prior action in federal court does not preclude later actions in state court if the federal court declined to retain jurisdiction over related state claims. Conversely, litigation strategies that do not raise certain claims can result in preclusion, as seen in other cited cases.
Staats could have filed two concurrent suits in state court: one appealing the LIRC decision and another for ADA and Rehabilitation Act claims. The Counties argue that these suits could have been consolidated, but this theory contradicts the Wisconsin Supreme Court's ruling in Hanlon v. Town of Milton, which indicated that failure to join a federal claim with an administrative review does not lead to claim preclusion. The Hanlon decision implies that while Wisconsin courts may allow the addition of federal claims to administrative petitions, they do not mandate it nor impose claim preclusion for those who choose not to.
The Counties also claim Waid is distinguishable because it involved an administrative decision rather than a court judgment; however, the jurisdiction scope of the initial tribunal and reviewing court is the critical factor. Froebel's case showed that a state administrative tribunal with broad jurisdiction could address federal claims, unlike Staats's situation where the reviewing court's jurisdiction was limited to WFEA claims without the obligation to consolidate. Therefore, Staats is allowed to pursue federal claims in a different forum.
Additionally, the district court must consider preliminary issues on remand, particularly regarding issue preclusion, which may affect Staats's claims despite the absence of claim preclusion. Relevant case law suggests that litigated issues in administrative proceedings may be precluded in subsequent federal cases. However, it remains uncertain if the WFEA incorporates federal standards from the ADA and Rehabilitation Act, potentially allowing distinct issues that Wisconsin courts might not preclude. The Counties previously raised issue preclusion, but the district court did not address it, focusing instead on claim preclusion.
The applicability of Title II of the Americans with Disabilities Act (ADA) to public employers remains uncertain, as neither party definitively raised the issue. Courts are divided on whether Title II encompasses employment discrimination by public entities. Notable cases illustrate this divide: the 11th Circuit's Bledsoe case supports Title II’s application to employment contexts, while the 9th Circuit’s Zimmerman case and other district court rulings reject this interpretation. The current court opts not to address this matter without it being explicitly presented. Additionally, there is no consensus on whether Title II mandates plaintiffs to exhaust state court remedies before pursuing federal remedies, with some lower courts, like Petersen, finding no such requirement. This issue has not been presented to the court, which will allow the district court to consider it on remand. Consequently, the district court's judgment is reversed, and the case is remanded for further proceedings.
